In our previous videos, we explained what crypto arbitrage is, and how to profit from it, we also shared several methods to put into practice to start making money today with crypto arbitrage.
Besides these videos, we decided to show you how to find the right coins for crypto arbitrage. And that's what we're going to see in today's video.
So, watch this video till the end because we're going to share the tips you need to know before you get into crypto arbitrage.
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Now, let's get started.
Cryptocurrency arbitrage is all about leveraging prices to make a profit. People have been trading crypto for years, but each exchange sets unique values for each currency for various reasons. Cryptocurrency arbitrage aims to help investors profit off of those price differences.
However, it's risky, the crypto market is known for its volatility. Cryptocurrency arbitrage is a technique that gives traders a chance to profit from the market's inefficiencies. These trades must get made instantly and simultaneously to earn a profit since the market fluctuates constantly.
Now, there are so many more altcoins on the market right now and we think there are many better ways to get in and make profits by trading them smartly through crypto arbitrage. So, we're going to tell you how to find these coins to trade, on CoinMarketCap and other websites.
To get started, you need to go to coinmarketcap.
If you've been involved in the cryptocurrency space for a while, then we're sure you've landed on CoinMarketCap at least once.
But in case you haven't, we're going to introduce you to it simply.
Actually, CoinMarketCap; provides useful information, statistics, and charts. It has data on thousands of cryptocurrencies. It is known for having the most accurate information. It is ranked in the top 500 largest websites in the world right now according to Similarweb.
You understand what we mean: CoinMarketCap is a monster.
But most cryptocurrency investors don't know how to use CoinMarketCap to its full potential in 2022, and only scratch the surface of what CoinMarketCap has to offer.
But we're not going to see all that in this video. We're going to focus primarily on how to search for the right coins for crypto arbitrage.
Not every coin in the world is listed on CoinMarketCap, but thousands are.
And you can search for any of them by typing the name or ticker of the coin (i.e. BTC for Bitcoin) in the search bar at the top right.
So CoinMarketCap is pretty much where you should start when doing crypto arbitrage.
It allows you to not only look at the overall health of the market but also discover new projects.
One of the great things about CoinMarketCap is that you can search 24 hours or you can filter and sort by 24 hours and seven days.
You will likely see the performance of cryptos based on a given period.
For example, at the time of this recording, STEPN lost 11%, Shiba inu 4%, and Bitcoin 7%.
And on the winning side, MoveZ gained 12%, OKB 4%, and AMP 30%.
Of course, these percentages don't have an impact on your choice of crypto. Because, no matter what, you will have arbitrage opportunities.
The most important thing is to choose crypto that has a large volume of trading in the last 24 hours. It will be volatile enough. It shows that many people are trading it, which will cause the price to fluctuate, and depending on the trade, those prices will have slight differences. And that's where you come in to take advantage of that price difference.
As your arbitrage trades will be done very quickly, you need to choose cryptos that have a lot of liquidity. That way, you know that at any time you can sell them and get your investment back safely.
So, trading volume and liquidity provision in cryptocurrency markets are very important.
Liquidity is the ability of a coin to be converted into cash or other coins without compromising cryptocurrencies' value, which is pivotal for every cryptocurrency exchange. High liquidity indicates a vibrant and stable market where participants can trade quickly, easily, and at fair prices. Considering the same, the majority of crypto exchange development processes are focused on reinforcing exchange platforms with features that help improve liquidity.
However, in our opinion, you should not choose a crypto that is too liquid. Let us explain why!
High liquidity ensures high stability and invulnerability to large swings in the market due to large trades. For example, whales can significantly influence, or in a worse scenario, manipulate prices in illiquid markets with little market activity. A single buy or sell order could lead to large fluctuations in cryptocurrency prices, thereby resulting in increased volatility and risks for the cryptocurrency market.
This can mean that you buy crypto on exchange A, and by the time you transfer it to exchange B, the price is already falling.
Do you want to know the tips you should know before getting into crypto arbitrage? Hit the like button and share this video if you haven't already. Now, let's continue.
There are many important points to consider when doing crypto arbitrage.
First, you should always look for new crypto listings. When a coin gets listed on the exchange for the first time, there’s likely little to no demand for it, which is great for arbitrage traders.
Then, you should avoid Bitcoin (BTC) transactions because they can take a long time. Because arbitrage requires quick trading, slow transaction times hurt your chances at a profit. You might want to consider altcoins like SOL, MATIC, and many more, which offer faster transaction times.
Before you begin looking for arbitrage, there are a few questions and factors to consider. It’s essential to plan how much goes into each trade. What percentage of profit will come from it? What fees will reduce that profit? Having a clear plan will help you seize the best arbitrage opportunities and answer those questions.
Next, you should monitor the market. Arbitrage opportunities can show up at any time. You need to watch the exchanges closely to find them. During market volatility, price differences are more significant, so you'll need to monitor developments and recent news that might lead to changes.
And the most important tip is diversification.
Limiting your trading to only a few exchanges will severely limit your arbitrage opportunities, or you might only see minuscule profits. To earn more, it’s crucial to trade on a variety of exchanges, and this also reduces the risks that come from not diversifying.
Then, you should always limit your losses. Because of crypto’s volatility, it’s important to trade quickly or even not at all. Sometimes, the risks outweigh the rewards, and it’s better not to lose your money than it is to gamble on a possible arbitrage opportunity.
To help protect from market changes, it’s essential to use hedging strategies. They can help you avoid potential losses, but can also reduce your potential profits. Hedging is similar to an insurance policy protecting you from imminent damages.
There are a variety of arbitrage opportunities and techniques that traders can benefit from whenever there is volatility and inefficiency in a market. However, as more traders look for arbitrage opportunities, they begin to disappear quickly, helping stabilize the market and the price of crypto across exchanges.
Anyway, arbitrage is a very popular method used by many people today to make a lot of money. And this method always works.
We hope we were able to provide some value and helped you to move a step ahead in your crypto journey Be sure to check out our Crypto Brand called Cryptopreneur, get yourself the highest quality Crypto Merch available right now on the market, and make sure to subscribe so that you don't miss out on any of our content. Till next time, Goodbye.